NEWPORT BEACH – With the city getting ready for a big move into its new $131 million home in January, the council will talk Tuesday night about the future of the current City Hall site.

Talks about the future development of the 4-acre site on the corner of Newport Boulevard and 32nd Street had centered around a residential and commercial use. But after a public outcry, the city is also considering a hotel or a combination of a hotel and residential units.

On Sept. 11 city staff presented the City Council with preliminary results of a study that analyzed the impacts and benefits for hotel use as well as an analysis for residential use, according to a staff report.

Staff is now seeking direction that could ultimately decide the future of the site.

Kimberly Brandt, the city's community development director, said staff is recommending the city allow them to seek development partners to come up with plans for either residential with some commercial or a hotel. The decision on Tuesday will not necessarily dictate what the site will ultimately become.

According to an analysis prepared by PKF Consulting USA, the site is, "well situated for hotel development due to a variety of factors including: excellent visibility on Newport Blvd., convenient access and proximity to the beach, Hoag Hospital and other commercial uses."

The study analyzed the development of a 78- or 120-room hotel upscale hotel that complements the area and attracts corporate demand.

The city contracted Keyser Marston Associates to analyze the impacts and benefits of two residential development options.

Option one would be a 92-unit apartment complex with 6,000 square feet of commercial space and 260 parking spaces, according to the staff report.

Option two would be a 99-unit development with 248 parking spots.

The residential option would generate between $1.4 million (92-unit) and $1.5 million (99-unit) per year while the hotel options would generate $981,253 (78-room) and $1.46 million (120-room).

"The analysis shows that a hotel project will have a larger economic impact to the community," the staff report says.

City Manager Dave Kiff agreed that the 120-room hotel option would have the greatest financial benefit for the city. However, the total revenue generated for either residential option is comparable to the 120-room hotel, officials said.

The 10-year direct and indirect economic impact on the area as a whole, meaning what residents or hotel guests would spend in the area, vary dramatically. The 120-room hotel option would generate an estimated $362 million over 10 years, while the residential developments would bring in about $30 million in the same time frame.

But the total projected 10-year revenues to the city for either use is comparable. The estimated 10-year revenue for the 120-room hotel is $16.7 million while estimates for the revenue generated by the apartment developments are $14 million and $15.1 million.

Brandt said these estimates will vary based on what the council ultimately decides to do in the way of public improvement spending. There are a couple of options that could cost the city around $5.57 million or as much as $9 million.

Improvement options include parking improvements, the cost of replacing the No. 2 Fire Station, pedestrian improvements and the cost to construct a public plaza and promenade.

"The overall economic impact of the hotel to the community is over 10 times that of residential use," the staff report said. "In summary, a 120-room or larger hotel may be the basis to finance other community needs and it would serve as a catalyst for area revitalization."

The move

The City Council is planning to hold its first meeting at the new City Hall site in December, with the building officially opening for business in January or February.

The project is estimated to cost $131 million and includes a 16-acre park, which would become the city's fifth largest park, a 17,000-square-foot expansion of the city's Central Library, a 450-space parking structure, a new community room, a new City Council chambers and a new city office building.

The move to the new site was approved in 2008 when residents voted for Measure B, which called for the relocation to 1100 Avocado Avenue near Fashion Island.

According to the city's website, the project is environmentally friendly and qualifies for a Leadership in Energy and Environmental Design Silver (LEED) designation.

On Tuesday the council will also consider:

A proposed hike in rent for commercial marina operators. The rent hikes would affect about 65 commercial marinas operating on city-managed tidelands. Two weeks ago the city heard strong opposition to the proposal from business owners.

Purchasing $1.8 million worth of Rule 20A credits from the city of Garden Grove that will be used to pay for utilities undergrounding. Garden Grove's City Council recently approved a Memorandum of Understanding that will transfer the credits for $831,591 in cash from Newport.

Approving the Balboa Village Implementation Plan. The plan identifies a new vision for the Balboa Village that will revitalize the area by making it a more family friendly environment, according to a staff report.

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